Morning. I'm Tracy Benguigui, insurance analyst at Barclays, and I'm pleased to host this fireside session with Arch. Our speaker is Marc Grandisson, CEO, François Morin, CFO. We have a lot to cover. I would just remind folks some housekeeping items. We do have a portal where you could submit questions. We're also doing some polling questions, that'll be the survey button, and we can review those responses later in the session. With that, I think I will quickly turn over to Marc if he has some opening remarks. Just nice to see you. I was hoping that by this time of the pandemic unfolding, that we'd be able to be face-to-face, hopefully that's still happening in not too distant future. It's great to be here. We're very happy to share our thoughts about the market. I'm not sure that we'll, like I told you before, that we'll add much more to what you've heard already, but you'll probably have the little Arch flavor to things and certainly see our own perspective. I think we have a couple of things that for us are a bit different than others, like our MI business, for instance, is very different than most other companies, and we're very pleased with it and very happy. It's a good story, right? It's a good time to be talking to you folks. It's a good market, good opportunities ahead, we're pretty excited. Even though we had a couple of storms that brewed in the Atlantic or the Gulf recently, I think overall, the industry and certainly Arch is in really good shape, and we're really leaning into this market very nicely. Very pleased to be here. Excellent. The first audience response question that I have is, we would all agree that the need for rate is not capital replenishment. Which of the factors below is the largest driving force behind rate hardening? There's just a huge narrative out there, so it's something that I'm trying to wrap my head around. Would it be years of underpricing complacency, higher catastrophe frequency events like climate change, social inflation, general inflation, lower investment yields, or heightened risk aversion? As we're waiting for those responses to pop up, if I just had to ping one answer, Marc, what do you think is the largest driving force in your communication with brokers and clients to sustain pricing actions? I think that it's a combination of all of those, but it's really the last one that you mentioned, which is heightened risk perception is really what drives pricing momentum. I think that there's fatigue overall in the industry in terms of results not living up or panning out to where they would need to be. The property cat is certainly an example. I think overall, it's a combination of all these things, and by virtue of climate change uncertainties, social inflation uncertainties, having really four or five years of underperforming in terms of underwriting-wise, and having, frankly, higher capital requirements, right, overall in the industry. I think it just creates a bit more, not aversion, but a little bit more sensitivity to the risks that are ahead and the need to get more rate to make sure that we have enough margin of safety as an industry to trade forward. A bit of everything. I guess the bear case I hear on hard pricing is that absent a traditional catalyst like a capital event, the real catalyst behind hard pricing is buffering reserves for multiple years of pricing complacency. What is your take on that? Well, I think that it's hard for me to know what other people have faced or are facing with. From our perspective, very much like the 1998 to 2000 years, 1997 to 2000 years, when you have four or five years of slightly less inadequate pricing, even sometimes more than inadequate pricing for sustainable time, that you see losses happen, and you sort of don't know how it can develop. It sort of makes you as a manager of insurance risk a bit more careful about this. I think it's certainly there. I don't think we've seen strong evidence through the reporting numbers as an industry, but I do believe that there might be some pressure being built up. I think that COVID-19, and what happened and in terms of slowing the economy, probably delayed perhaps that recognition or the speed at which it's coming through in the industry. Certainly, it's something that at the very least, uncertainties around it, like as I mentioned just before, is clearly something that is near and dear to everybody's, all the CEOs' minds in the industry. After six consecutive quarters of rate increases above 10%, and as you characterize comfortably ahead of loss trend, what is your crystal ball for the length and the size of that rate momentum to continue? If I knew this, I would be in your position, or I'd be investing in this space. I wouldn't be running the business. I think all kidding aside, I think that a hard market, typically a hardening market lasts much more than six quarters, right? If I look back on history, if history can be sort of a teacher to us. I mean, you look at the 2000 to 2003, the market rate increases were there for three to four, three years, really. I mean, the issue with it, not the same clip increase. It does tend to increase a lot quicker, a lot faster, earlier because you need that correction to take hold. The last year or the last several quarters, it's a bit less. I would say right now we're probably middle of the way into pricing improving. I think it's kind of hard for us to see a turn right away. Market do not flip up and down that quickly. They tend to flip up a lot quicker than they flip down. There tends to be a ramp up very rapidly, which we've seen over the last six to eight quarters, and then we'll probably see a gradual after that point, a gradual release, because we also have to make sure that we're comfortable with the results as they develop. It takes a while. In the liability business, Tracy, as you know, sometimes it takes two, three years to realize it, as we saw in 2004, 2005, 2006 period from the casualty lines. We have this moment. This has momentum. It's a human system, and clearly people are collectively thinking about needing for more rate. You hear it everywhere. When everybody's agreeing and understanding it's like a big boat. It takes a long time to shift away from its course. Okay, great. You said there is a need for more rate. How would you characterize your loss trend as it is not static? Like, what it is now and how much higher can it climb? François, you want to try this one? Well, we've always taken a long-term view on trend. We don't want to get caught in a corner where we just focus on what's transpired the last year or two or three years, and I think that can be dangerous. From our point of view, we've taken a long-term view of trend. That's been, Marc has said it, we've said many times, like roughly 200-250 basis points above the CPI is kind of what we see long-term inflation being for the types of lines of business we're in. Certainly for excess layers, it's more in the double digits, right? 8 to 12. It varies. It's hard to make a blanket statement what trend is at, because as you know, it varies by line of business and whether you're primary or excess. In terms of social inflation, though, I think there's noise around it. I think at this point, while we do see it in some areas, I wouldn't say it's uniform across the whole book. I think some of it is a bit more, it's less precise. It hasn't really shown up in the data yet. You hear about a case here, a case there. Yeah, it makes sense. You read about it in the news, but whether it applies to the whole book is something that we look at. But at this point, it really hasn't transpired, and I can't say it's really been there across the whole book. That's how we think about it. We're still in the 3% to 5% kind of trend expectations for most of our lines of business. Then, we make adjustments on specific cases. You mentioned CPI. On inflation, do you think investor concerns are overblown because we just haven't really been in a real inflationary environment? How much insurance risk is really tied to CPI type of inflation? I'm just also wondering if you could touch upon some countervailing factors like higher insurable exposures or higher asset appreciation. Well, yeah. That's where we have to be careful. No question that what you see on the news, whether it's on property, right, the cost of lumber has made the headlines for the last six months or so, and people, I think rightly assume that if there's a shortage of labor or a shortage of manpower, and materials are more expensive, it's going to materialize in higher loss costs, certainly on first-party property type losses. Whether that's sustainable, whether that reverts back to more of a long-term kind of view or expectations on losses, we think it will. You're right. That means a lot of the lines of business on the liability side are a function of the level of activity in the economy. What we saw last year in 2020 with a lot of people being shut down, less cars on the road, less traffic in stores. That just reduces, and that's more, I'd say, a frequency thing than a severity thing. I think the severity trends have been there. I think have been pretty consistent. There's always a debate over whether courts being closed, whether that delayed some jury settlements or awards, et cetera. That's all part of the equation that we have to think about, but no question that a lot of lines of business are directly linked to the level of economic activity. If GDP is the metric that we use for that, yeah, we should, as GDP picks back up after the dip we saw last year, I think we should be seeing some levels of maybe slightly higher inflation for the next few quarters, at least. Tracy, for what it's worth, most of the lines of business have an exposure base that you price off of that actually has some inflation sensitivity to it. You do tend to reflect that. The only thing is you may have a little bit above that in looking back. I think if you appropriately, like we just talked about, if you use the CPI as the inflation rate, it's a 1.7%, roughly, right? 1.8% for the last four years. We would argue that you're lagging a little bit there. I think it depends what the investors are assuming in terms of inflation rate. As you heard François mention, we tend to be a bit more realistic and know that the CPI, because insurance tends to make up for a lot of issues, indemnitors, all the people who want to get a piece of the action. It does tend to create more inflation, and as long as you stay sane in the long term, like François just mentioned, I think you avoid the huge mistake that are structurally on your book for many years. I guess it depends on what your clients or the stocks you're looking at, what they've assumed in terms of inflation. I guess, as I mentioned, we haven't really been in this inflationary environment. Yeah Everyone's trying to wrap their head around that. Maybe just turning quickly to catastrophes. It's been a really active quarter, and it hasn't even closed yet. PCS basically designate more than 20 events. We have Ida out there, but also European flood, you have California wildfires. Yeah. I'm just wondering what your early take is on third quarter activity, maybe Hurricane Ida in particular, and my follow-up would be, do all these events sustain pricing? I'll start a little bit, François can talk about the return. At a high level, our returns are, again, like we talked about on the cat, the returns should be higher. I think Hurricane Ida and the wildfire and the storm Bernd in Europe are a reminder that we need to get better pricing. That's not new, Tracy. We've been saying about pricing on a cat being a little bit lower than we would expect it to be on a risk-adjusted basis for two, three years now. You see our writings on property cat have not grown a whole lot on a net basis for a little while. I think it's due to the fact that we have some capital providers who have lower expected returns. I think it does dampen what we would otherwise see as perhaps a higher demand for pricing from the traditional reinsurance marketplace. This is definitely a phenomenon that we've seen, Tracy, for five or six years. It's not new. I think it's just another reminder of that. Now, my argument is always that, listen, we still have to do what's right for our shareholders and make sure that our net return and our return that we provide for our shareholders is thus clear that risk-adjusted. I think we would ask for higher than the traditional 15% return, frankly, on a property cat because of all the uncertainties that it comes with it. Again, if you're competing with someone who's okay with a much less than this, it's really hard to compete and to make a difference. We're still hopeful, though I think that Hurricane Ida and Bernd are great reminders or sad reminders that the world is risky, and we do need to get a higher return over the long haul. I think if you look at the last four years, not only this quarter, Tracy, the last four years have been an underperforming area in the property cat space in general, not necessarily just for the Cat XL, but in the property cat exposure. If you roll property cat, it hasn't been a huge winner over the last four years. I think that hopefully the alternative provider of capital will sort of come to the table and appreciate that maybe there's more need for returns in that space. That was a long answer. I think the short answer I would tell you is if we see the rates going up to the level that we like and we're appreciating and comfortable with the returns, you'll see a property cat writing increase. It hasn't happened over the last couple of years. I think when you see us increase cat writings is when you can say to yourself, "Okay, now pricing is getting above a risk-adjusted return that's acceptable for Arch. Maybe outside your risk appetite, how do you think these losses are going to be shaping up for the industry? I'll just tell you what I heard recently, but you have to be careful. I've called a hard market in cat about four times. Of the last four times, it didn't happen. I've got to be careful. I don't have a great track record in predicting it. What logic dictates and what happens in the marketplace is very different. I think right now there seem to be a, not a consensus, but the initial discussion from the alternative capital is to say, well, maybe we have cat fatigue, cat return fatigue. Trap capital will probably be another event, and we're closer to 1/1. They've been promised price increases every time there's a cat event for a little while. They didn't come through as much as they would have hoped for and had more losses coming through. We're hearing that a lot more questioning on a third-party capital and definitely a flight to quality. People are really trying to say, "Okay, let me take a step back and let me re-underwrite the underwriters that I'm giving capital to make sure that I'm optimizing my return. I'm making sure I'm taking the best advantage of the market return." We're cautiously optimistic for the 1/1 renewal. I think we do need more rate. We've said it for a while. Now, having the winter storm in Texas earlier in the year, let's not forget that. I think these two events this quarter, I think, just make the case for Certainly, our team is expecting to get more pricing for them to play going forward. I don't think we're the only ones out there. Again, building up a momentum to sustain a bit more of a property cat increase in that 1/1 renewal. That's what we're hoping and thinking is going to shape up by now. I've been wrong before. We'll see how. To your point, it's all about supplying demand of capital. We think that the supply of capital now may be taking a pause and wants to be a bit more bespoke, a bit more thoughtful about the way they're doing it. That's what it seems to be for last week, the narrative. Yeah. Got it. Arch is known for cycle management. You did compress growth in 2015 to 2018, you did grow meaningfully in 2019 before the industry had taken real noticeable rate increases. It was just the beginning. In hindsight, do you feel good about this, or do you think you've met your risk-adjusted return hurdles? Yeah. The growth we had in 2019 was already. Whenever we talk about an overall rate increase in our speeches, it's a blend of all our lines of business. Underneath that, and it's a lot less now, but you have really a wide range of rate increases. If you look at the increase in 2019, there were lines of business in areas where there was pressure already built up and pricing was getting us to the higher threshold. Frankly, one thing that's very important to us, it's one of our key principles, is when the market gets hard, you need to own the renewals. You need to get on it, because by the time people realize it's good, you won't be able to get on it. It really behooves us to maybe we have been earlier in some lines of business that we, in retrospect, shouldn't have been on, but if we hadn't done this, we wouldn't have had the next three years of outperformance that we will be picking up as a result of that. That's a principle I learned back in the 1990s from Paul Ingrey. That's something that's very near and dear to our hearts. Owning the renewal is very important in that space. That's why you probably saw us tilt and shift there because we want to make sure that. As soon as we could see the market sort of getting there, it took us a while to tell you on the street, but we were seeing the building momentum of rate increases and momentum of hardening. We see it happening, we just lean into it, we started leaning into it heavily, we got heavier and heavier, as you know. I would say we're carrying on this leaning hard into it. Got it. I wanted to touch upon all these startups and scale-ups that are coming into reinsurance and specialty insurance. If I look back at the class of 2001, I remember being that $500 million of capital was like the floor to operate. It came $1 billion, it just grew from there, especially for casualty risk. What do you think is the new floor for capital for a startup to be a formidable player? Do you mean to recreate an Arch? It depends what you want to recreate, right? It depends what you want to recreate. I think that the floor, it's funny you say that because the floor, I did some work on the capital requirements from the various rating agencies back in 2001 versus now. A billion, 21 years ago is really $2 billion right now. It's about twice as much capital needed to even play and have a similar rating. There are more capital requirements than there were 20 years ago. I think if you are going to be specialized, if you're an insurance player, you probably don't need $2 billion. If you're going to be like us, a combination of a collective of various units to deploy capital, we had $1 billion back in I can only speak from experience, right, Tracy? I'm not sure about the other ones. From my perspective, we had $1 billion when we started in 2001, we were pressing hard on the accelerator. We had to go and raise a secondary very early on because it was so successful. I would say that $2 billion-$2.5 billion is, if you want to recreate an Arch, retake the market to where it needs to get to, that's probably what you would need to recreate an Arch. I don't know. It depends on your aspirations to what you want to recreate. I would say that, to be fair, that we didn't think we were going to recreate a company in such of our size as we are right now 20 years ago. That's not what we were thinking about. I think a couple of billion, I think Convex is about a couple of billion. I think they've been successful in the marketplace. We see them being a decent player and really being able to work their way into placements. Clients are also, not worried, but they're concerned, and they're rightfully prudent in providing big limits, taking big limits from smaller players. They want to make sure that the risk management will be proven before they place more risk into this. I'd say a couple of billion is probably to create a broad-based multi-line business. This is my view. Got it. I'd add to that, I think there's a little bit of the market reception to size, whether you're an approved reinsurer, whether the rating agencies give you the ratings you're looking for. That's an angle that's certainly part of the discussion. I think I just want to throw in here that the costs that we're facing now as an industry in terms of compliance, regulation. 20 years ago, you could open up a shop on Front Street in Bermuda with a couple of computers, and off and running you went. Now it's a much more complicated system you have to navigate through that's expensive, whether it's cyber and all the systems you have to get to be able to operate in this environment. It's something that I think there's a minimum scale that is, I think, maybe has gone up a little bit from what it was 20 years ago, just because the infrastructure needs that are required to really be successful in this market that are just a bit higher than they were back then. Got it. We've all heard from you that MI and P&C operate at different market cycles, and having MI business actually allows Arch to be more agile during changes in market conditions. Why do you think investors are not getting the punchline here? What kind of bias do you want to squash? You did talk about capital a number of times. How should we be thinking about your capital diversification benefits? I think it's kind of hard because we've played that part, and I read your note last week, which was very appropriate. It's sort of something that we believe is a competitive advantage to us because we are able to still provide a reasonable return to our shareholders, at least for the last four or five years, not as much as we would have wanted, but still reasonable. Despite having big headwinds up until 2020 and 2019 in the P&C side. I think that what's now missing, both the backdrop to this phenomenon, say, well, I could recreate MI by buying an MI company, and I can buy a P&C company by buying a P&C company. The question and what we like to tell the world, and I think we've proven that over the last 20 years, is that, you can't buy Arch Management in either of those. Arch Management is the only place where you can get it, is at Arch, buying the MI and the P&C. I think that we've proven ourselves to be pretty good, pretty adept at being capital managers and really moving things around and playing around. I think over time, I think you sort of back in us in terms of being able on a long-term basis. If you're a long-term player, I think Arch is a good place from that perspective. If you're just looking for the next quarter, it might be a totally different story. That's not what François and I manage the business for. We manage it for the long haul. I think you'll see that over time, our results are going to be higher with much less risk around the expected margin. That's because of our ability to move around those things. In addition to this, I would say that having MI or having P&C, because now we might come to a place where MI at some point becomes a bit softer. We can still deploy capital on the P&C side is that it allows us to stay sane and stay economically rational through a market. That's really, really important from our perspective. I think that what I would tell the world is you need to think about yourself, is Arch a good steward of capital, and can they really manage capital effectively? I think we've proven this for the last 20 years. It's hard for people to appreciate. It's kind of hard from the outside to see the inner workings of Arch. I think if you saw the board meeting discussion we had last week, the quarterly call we have with our units, the capital management is a constant discussion in our company. It's not about market share. It's not about whatever, all the top line. It's always about capital management. You saw we bought a fair amount of shares this year because we do believe that, yeah, you're right, the market is missing some of that aspect of it. Now what we have is the three units, P&C insurance, reinsurance, MI, really at a high level in terms of return expectations. We're in an unusual place where we've never seen this before, Tracy. It's a beautiful place for Arch to be. The three businesses are hitting on all cylinders, and it's a really nice place and very nice thing to see. It makes for our meetings, François and I, with our team, a lot easier. A lot easier discussions, much more fun discussions. What I would tell the world, what I would tell the investors is, you got to first believe in the cycle management. If you believe in cycle management and believe that Arch is probably the only company that really does it effectively, then you would welcome and be very pleased that they have another place, another way to deploy in and out of markets. That's what I would say. François, anything to add or? No. I want to spend a little bit more time on MI. How should we be thinking about the potential of reserve releases, considering you had added $400 million last year? We've since seen higher housing prices. Unemployment rates have been trending down. Wages are going up. Delinquencies are going down. I'm also cognizant that the mortgage forbearance program is ending on October 1st, or at least beginning to end. Yeah. I think that's a very good question, people. We've gotten that question many times. As you can imagine, people are interested to see how the whole thing plays out. We're still patient. The one thing that we do think about is, yes, there is a scenario that, as you suggest, that tells us that there may be material reserve releases that would come our way if and when the delinquencies cure, all the borrowers become current again, or they come up with some agreement with their lenders. That's certainly a scenario. Again, it's something we've never seen before. Other forbearance programs that we've seen in the past have been typically around disaster areas, hurricanes, and those programs are a lot shorter. They're good for 30 days, 60 days, and then the local economies pick back up, and people get back to work and they get their jobs, and then they become current on their mortgages. Here, while there's a lot of good economic trends that suggest that, yes, this will. Certainly the one that we keep telling everybody and we truly believe in is home price appreciation has been just so much better than anybody could have thought back a year or 18 months ago. That is working in our favor, and that's the highest and best predictor of performance in mortgages and defaults. Yes, no question that if and when the data confirms that the reserves we set up are not necessary, we will release them at the time. Could that start in the fourth quarter? It might. As you said, because the 18-month kind of length of duration of these loans and forbearance will start to roll off, the vast majority having started last April and May. In the fourth quarter this year, we could see some data, but then a bit of a lag. People have to negotiate. It could start. I think maybe the bulk of it might be more in the first half of 2022. Got it. What is your 12-month outlook for new insurance written, including your view of refinancing activity and portfolio persistency? That's interesting because we went through a very heavy wave of refinancings, as you know, in the last year. Now we basically pretty much turned the portfolio over almost completely. What we're thinking, and again, depending on how the economy behaves, I think we should see good persistency in our portfolio because we have less incentives to refinance. That's a positive to us. The premiums will stick to our ribs, and we'll have those loans as part of our portfolio for a longer period. In terms of NIW, you would think that refinancings will be down, presumably, if things stay the same. I think the big question mark to us on terms of new home purchases is the inventory. The one thing that we've been lacking, and that is lacking in a big way in the economy across the country, is really lack of inventory for starter homes in particular. That's where we still see strong growth, strong demand. Does NIW really pick up in a big way? I think it will depend on how much inventory is available in the market. At this point, there's progress being made, but we think there's still a lot to be done specifically for millennials that are looking to maybe make their first home purchase, et cetera. That is something we're watching. At this point, we think it's going to take a bit of time for that whole issue to work itself out. Yeah, Tracy, quickly, a couple of things I will add to this is the NIW is also increasing because the house prices are also increasing. We are getting inflated or increasing amount of insurance, which is good news for us. I think that to go back to what François just said, the refinance was 35%-40%, I know as high as that last year when all the interest rates were going down. The purchase is about 90% now, which is more of a purchase market. The purchase market expectation from the MBA for the next two, three years is still increasing. Our penetration in the purchase market is clearly what MI is number one for. This is what we have a much higher market share of it. What we hear our guys on the MI tell us is, we have a record last year. We're looking like having a really good year this year, but we're not seeing that much of a drop next year because of the other factors we're mentioning, the pent-up demand for housing. The key thing is our insurance in-force, which really is a driver for future earnings or premium, is healthy, stabilized to increasing. By virtue of the persistence, costs going back to 75%-80% that we would expect in a normal case should bode well for sustainability of earnings and premium for the foreseeable future. NIW will help us build a bit more of that IIF, and that's a good place to be. Got it. Just going to remind everyone that we do have some audience response polling questions. If you could go to the survey button. The second one I have is, Arch had annualized operating ROE of 10.3% for the first half of 2021. My ROE expectation for Arch in 2022 is 8%-10%, 10%-12%, or above 12%. We will revisit that. Just on the topic of ROEs, just going back to my old role, I heard reinsurers, insurers talking about achieving 15% ROEs through the cycle. I guess after the financial crisis, that really became 900 or 1,000 basis points ahead of the risk-free rate, which would really imply that during the hard part of the cycle, returns will have to be so extraordinary that'll make up for that high single-digit returns during the soft market. Do you think reinsurers or insurers have unrealistically set this blended ROE target through the cycle? Well, I think the 15%, I would say we were certainly that camp. That was one of our guiding principles from day one. I think, if we step back, those were set when risk-free interest rates were much higher than they are today, by at least 300 basis points. It was a big difference. If you just run the simple math and I think most insurers have taken the approach in the last couple of years, at least to maybe take on a bit more aggressive, slightly more aggressive views on investment strategies and moving away from core fixed income to some alternative like funds and maybe some equity strategies as a way to make up for that loss of investment income. Fundamentally, when we look at it, I think that's been one of our challenges is for us to achieve a 15% return, when you're basically earning nothing on risk-free interest rates, which is how we compensate our underwriters, is almost an impossible task. I mean, it's not impossible, the way to get there is you have to really take on a lot more risk on the underwriting side, that introduces a volatility that is not necessarily something we're looking for. Having to balance and saying, "Yeah, okay. We're willing to take a bit of risk," some risk on the underwriting side, measured risk, and risk we can understand and quantify. That's something we need to do. What's a realistic return on that book of business? We think, again, given the level of interest rates, 15% is a bit ambitious, if not impossible over the cycle. If we go back and if 10 years from now, if interest rates go back up to something back to what they were back 20 years ago, or 10 years ago, we'd say, "Okay, now let it keep floating at, for us, it's 950 above the risk-free, you will get back to a 15% ROE," let's say. Yep. I guess I'll follow up there since you mentioned about that interest rate dynamic. Do you think 90% is the new 94%? Maybe if we look back at a prior point. Yeah. Yeah. Absolutely. That's not crazy. You can't make a decent return unless you have a 20-year tail on the business- Yep with these levels of interest rates. Absolutely. Even us, we were saying like two years ago, we were saying. Wow Hey, 95 should be a good starting point for us to make a decent return." That is no longer the case. We have to be, if not 90, very low, 91, 92, whatever, depending on line of business. You're absolutely correct. Yep. Yep. I can't help but notice that your cost to equity is pretty high. It's 11.5%, which would imply that buyback stock is very compelling. Help us understand your capability or wherewithal to buy back shares. I understand that you did tap into the debt markets. You raised $1 billion last year. I guess the way I understand that in order to get Tier 3 capital credit from the BMA, it really was pushed down to the operating companies. How do you think about, I guess the capital needed to support growth and capital for repurchasing? Yeah. Well, we can debate the cost of equity. I think our view would be that cost of capital is a bit less than that for us. No question that when we raised $1 billion last June, part of our view at that time was we were still in the early days of COVID, was as much a defensive measure, make sure we had sufficient capital, specifically on the uncertainty around the mortgage segment. Also, we saw the opportunities coming our way for growth, and we wanted to have the ability to deploy capital in our businesses where the returns were going to be, we were going to see good returns. You were right, that money had to be pushed down. Since then, at some point, once it's pushed down and then you ride the business on that capital, it becomes somewhat fungible, right? Our view is when we think about share buybacks, it's another way for us to deploy capital. Our preferred way to deploy capital, as you know, is to put it to work in the businesses. When the business is doing very well and they're producing healthy returns, you do generate a fair amount of excess capital along the way. Not only in the last year, but also as we look forward and look ahead, we do think that our returns should be good. That gives us more comfort that we are in a strong capital position. We're growing at a good clip, and that's not changing. As we think about how much more capital can we deploy, and we're going to be disciplined about the whole process, we do think that buying back shares and returning the capital to our shareholders is a good mechanism, is a good practice. At the current levels, the current pricing, stock price, I think we're comfortable buying back the shares. As long as we remain comfortable that we're in an excess capital position, we can certainly do that at this price. We were just reminiscing about being part of the class of 2001, you've grown tremendously. You're much more in a mature state right now. I'm just curious how you think about the possibility of introducing dividends or that disrupt your ability to be agile. I guess on an investor perspective, dividends will convey confidence in the consistency of your earnings. Yeah. We talked about it last week at our board meeting, had a very long discussion on that. That is certainly a valid way to look at it. Going back to Marc's comments, I think our reputation, which we think has been built over the last 20 years, is we're good stewards of capital. Our shareholders expect us to deploy the capital when we see fit, when we see the good opportunities. Absolutely, could we introduce a small dividend that would be a regular dividend that wouldn't really be a big issue for us to manage? Yeah, we could, but for the time being, we're still very comfortable buying back shares. That's been our preferred way of returning capital to shareholders. Again, I think what we've done over the last 20 years suggests that when we don't see the opportunities, we shrink, we give it back, and we wait for the next big moment for us to grow and deploy the capital aggressively. Tracy, for what it's worth, most of our investors saying they don't want a dividend. By and large, they tell us, "We trust you." If somebody wants to get capital away from you and buy back their shares, that's on them. They make the decision from a tax perspective and capital deployment on their own perspective, there's a high level of trust that we'll be able to deploy it in the right places. We talk about it all the time. Very insightful. Sad to say that time is up. Thank you so much for today's discussion. My pleasure. With that, we'll conclude. Thanks for having us, Tracy. Yeah, thank you so much. Nice seeing you.